President Biden on Wednesday will address ongoing supply chain problems, as major retailers warn of shortages and price hikes during the upcoming holiday season.
Biden is expected to blame the pandemic, which has caused factories to close and disrupted ports around the world, for the issues, but also tout agreements the White House has brokered with private sector entities to get goods flowing again.
“The supply chain is essentially in the hands of the private sector, so we need the private sector to step up to help solve these problems,” a senior administration official told reporters Tuesday night.
The White House is announcing that the Port of Los Angeles has agreed to essentially double its hours and go to 24/7 operations. In doing so, it’s joining the Port of Long Beach, which launched similar nighttime and weekend shifts a few weeks ago.
Together, the two California ports handle about 40% of the container traffic that enters the United States.
The White House also helped secure commitments from three of the largest goods carriers — Walmart, FedEx and UPS — to take steps to move toward 24/7 operations.
“By taking these steps,” the senior administration official said, “they’re saying to the rest of the supply chain, ‘You need to move too. Let’s step it up.’ “
The overall goal is to move more cargo through the ports faster. Members of the International Longshore and Warehouse Union have said they are willing to work extra shifts, the White House says.
Once onshore, of course, the cargo still has to be moved through the rest of the country, which means a lot more throughput by truck and rail.
It’s the latest step on supply chains
The supply chain woes are one of several economic challenges facing the Biden administration. Job growth has also slowed sharply in the last two months. And forecasters have been downgrading their expectations for economic growth this year.
White House press secretary Jen Psaki said solving supply chain issues requires cooperation between the private sector, including rail and trucking, ports and labor unions.
“The supply chain bottlenecks range industry to industry, but we certainly know addressing … those bottlenecks at ports could help address what we see in many industries across the country and, frankly, are leading people who are preparing for holidays, for Christmas, whatever they may celebrate — birthdays — to order goods and get them to people’s homes,” she said Tuesday.
It’s not the first time the administration has tried to tackle supply chain problems.
Soon after taking office, Biden signed an executive order kicking off a broad review of products that had been in short supply, including semiconductors and pharmaceutical ingredients.
Biden created a task force over the summer to address the most urgent shortages, and then tapped a former Obama administration transportation official, John Porcari, to serve as the new “ports envoy” to help get goods flowing. Porcari helped broker the agreements with the ports and the union.
The role of recovery aid
In the call with reporters Tuesday night, the White House also pushed back against concerns that direct payments from Biden’s March relief law have exacerbated the problems, fueling demand for goods and possibly discouraging needed labor.
The administration says the supply chain disruptions are global in nature, a challenge that’s been made worse by the spreading of the coronavirus delta variant.
Two of the world’s largest ports in China experienced partial closures aimed at curbing COVID-19 outbreaks, the White House notes. And in September, hundreds of factories closed under lockdown restrictions in Vietnam.
The administration agrees that part of the current issue has to do with increased demand, but they see that as a positive indicator of how the United States has recovered faster from the pandemic than other developed nations.
As for the impacts on the labor supply, the official said that’s more complicated.
The recovery package’s direct payments and extra unemployment benefits were a “vital lifeline” for many struggling families, the administration official said.
“And to the extent that that’s allowing people to be more thoughtful about when and how and for what offer they choose to reconnect to the labor force, that ultimately is very encouraging,” the official added.